New Revenue Streams

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This is Celia Hirschman with On the Beat for KCRW.

The bean counters in the music business are in for some surprises.

First, a new online record label opens, written as The venture was founded by industry insider Josh Deutsch and Engadget head Peter Rojas. RCRDLBL is a network of established record labels, banded together as a destination site, blog and label wrapped in one. Music on the site is given away free to visitors. In the first week, the upstart featured exclusive tracks from Justice, with Spank Rock and Mos Def, along with music from Junip, featuring Jose Gonzalez as well as several other up and coming new bands. In addition to the exclusive downloads, the site is currently streaming rare recordings from Grizzly Bear, Art Brut, Cold War Kids, Bloc Party, Soulsavers and many others.

The economics of the new venture are interesting: Artists receive advance money to record exclusively in short-term deals, and the site generates its income through online advertising. All third-party licensing deals, like those for TV shows, movies and television advertising are split between the label and the band.

I know a lot of artists interested in a business model that attracts major talent for exclusive content, without long term commitments, giving away music yet generating revenue at the same time.

And while some guys give it away, other cats are selling the whole shebang! The most interesting trend in music retailing is the parade of special limited editions. Radiohead didn't invent the idea but their In Rainbows box set earned a lot of attention. Retailing for about $80.00, the box set will include the new album on CD, as well as a two-disc heavyweight-vinyl version, along with an enhanced CD with new songs, photos, and lyrics -- all encased in a special hardback book and slipcase. The collectables market in music is alive and well.

U2 has joined the party making a splash with the Joshua Tree 20th Anniversary Edition this week. Their label has launched four entirely different configurations of special packaging for the fans.

Meanwhile, Bob Dylan has a three-CD, 51-track, cloth-covered box set just out in the market as well. Pink Floyd's first album, The Piper at the Gates of Dawn has been released in a special mono and stereo limited edition, 40 years after its original recording. Even Joy Division, a band that only made thee albums before the lead singer's death, will receive the special edition treatment. Rhino will be releasing deluxe versions of each of the band's alums, along with a compilation of rare recordings, ringtones and vinyl box sets. In the coming months, look for many more special editions to be released from many major names in music.

Many record executives think spending lots of additional money manufacturing special packages is counter-productive. In an age where over 100 million iPods have been sold, why would anyone spend so much money to buy them? The answer may surprise you.

Estimates are, Radiohead earned over $3 million selling their box set. The volume of sales does not need to be high for revenue to be strong when limited editions cost north of $30. They are valued by hard core fans, profitable for the bands, and healthy for an ailing record industry.

From giving it away to making you pay, the record industry never ceases to redefine itself to meet the market conditions as they appear.

This is Celia Hirschman with On the Beat for KCRW. Happy Thanksgiving everyone. Thanks for listening.